SB2059

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§235- Well abandonment compliance income tax credit. (a) There shall be allowed to each taxpayer a well abandonment compliance income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The cost upon which the tax credit is computed shall be determined at the entity level. In the case of a partnership, S corporation, estate, trust, or other pass through entity, distribution and share of the credit shall be determined by rule.

(c) The well abandonment compliance income tax credit shall be equal to per cent of the qualified compliance costs incurred by the taxpayer, up to a maximum of $ .

(d) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(e) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a credit under this section;

(2) May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and

(3) May adopt rules pursuant to chapter 91 to effectuate this section.

(f) The commission on water resource management shall:

(1) Maintain records of the total amount of qualified compliance costs for each taxpayer claiming a credit;

(2) Verify the amount of the qualified compliance costs claimed;

(3) Total all qualified compliance costs claimed; and

(4) Certify the total amount of the tax credit for each taxable year.

Upon each determination, the commission on water resource management shall issue a certificate to the taxpayer verifying the qualifying compliance costs and the credit amount certified for each taxable year. For a taxable year, the commission on water resource management may certify a credit for a taxpayer who could have claimed the credit in a previous taxable year, but chose not to because the maximum annual credit amount under subsection (g) was reached in that taxable year.

The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation. Notwithstanding the commission on water resource management's certification authority under this section, the director of taxation may audit and adjust certification to conform to the facts.

Notwithstanding any other law to the contrary, the information required by this subsection shall be available for public inspection and dissemination under chapter 92F.

(g) If in any taxable year the annual amount of certified credits reaches $ in the aggregate, the commission on water resource management shall immediately discontinue certifying credits and notify the department of taxation. In no instance shall the commission on water resource management certify a total amount of credits exceeding $ per taxable year. To comply with this restriction, the commission on water resource management shall certify credits on a first come, first served basis.

The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year.

(h) This section shall not apply to taxable years beginning after December 31, .

(i) As used in this section:

"Abandoned well" shall have the same meaning as defined in section 174C-81.

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified compliance costs" means construction costs that are necessary and directly incurred by the taxpayer to fill and seal an abandoned well in compliance with section 174C-87. "Qualified compliance costs" do not include costs incurred to seal or plug an incomplete and abandoned well pursuant to section 174C-84(e).

"Well" shall have the same meaning as defined in section 174C-3."

SECTION 2. Chapter 508D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§508D- Abandoned wells; material fact; disclosure. (a) The existence of an abandoned well on real property subject to this chapter shall be considered a material fact and shall be included in a seller's disclosure statement.

(b) If a seller fails to disclose the existence of an abandoned well, as required under subsection (a), the seller shall be liable to the buyer for costs incurred by the buyer to fill and seal the abandoned well in compliance with section 174C-87."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval; provided that section 1 of this Act shall:

(1) Apply to taxable years beginning after December 31, 2019; and

(2) Be repealed on .

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2059
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII